BP CEO Hayward to step down in October

July 26, 2010 12:00:00 AM PDT

NEW ORLEANS --

BP is jettisoning CEO Tony Hayward, whose verbal blunders made the oil giant's image even worse as it struggled to contain the Gulf oil spill, and will assign him to a key job in Russia.Hayward had been a well-regarded chief executive. But his promise when he took the job in 2007 to focus on safety "like a laser" came back to haunt him after an April 20 explosion on the Deepwater Horizon rig killed 11 workers and unleashed a deep-sea gusher of oil.

The 53-year-old has become the battered face of BP's efforts to contain the Gulf of Mexico oil spill and clean up the damage.

Hayward is set to take a post at TNK-BP, the company's joint venture in Russia, according to a person familiar with the matter, who spoke on condition of anonymity because an official announcement had not been made by the British company's board.

It's not yet clear what Hayward's role will be with the new company, but the job suggests BP still holds more faith in Hayward than much of the U.S. public and political establishment do. Analysts consider the Russian venture one of BP's crown jewels; it accounts for a quarter of the company's production.

According to news reports, Hayward will likely be replaced by an American, Bob Dudley, who succeeded Hayward as BP's point man in dealing with the spill effort and was in London Monday with other board members.

The board met Monday but it was unclear whether it had made the demotion official. A statement was expected early Tuesday, at the same time the company files its second quarter results.

Hayward did not speak to reporters after leaving the board meeting at BP's headquarters.

Meanwhile, crews trying to plug the leaky well for good had to stop work late last week because of the threat from Tropical Storm Bonnie, but the effort was back on track as skies cleared Sunday. A drill rig was expected to reconnect to the relief tunnel that will be used to pump in mud and cement to seal the well, and drilling could resume in the next few days.

Completion of the relief well that is the best chance to permanently stop the oil now looks possible by mid-August, but retired Coast Guard Adm. Thad Allen, the government's point man for the spill, said he wouldn't hesitate to order another evacuation based on forecasts similar to the ones for Bonnie.

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In New York, BP shares rose almost 5 percent Monday as the stock market anticipated a formal announcement about Hayward. Shares of BP PLC rose $1.79, or 4.9 percent, to close at $38.65 Monday in New York. BP shares closed up 4.6 percent at 416.95 pence ($6.45) in London.

BP says the cost of dealing with the spill had reached nearly $4 billion by July 19, but that it was too early to quantify the eventual total cost.

BP is the process of selling assets to raise $10 billion toward a $20 billion fund that will finance the clean up of the mess in the Gulf. BP announced last week that it had sold properties in the United States, Canada and Egypt to Apache Corp. for $7 billion.

Under pressure from President Barack Obama, BP has also announced that it will pay no more dividends to shareholders this year. That move disappointed some 18 million Britons, many of them retirees, who hold stock in what used to be the country's largest company.